June 29, 2019

Rwanda Joins IMF’s ‘Aid–With No Money’ Program


President Paul Kagame (R) meets with Fund Managing Director Christine Lagarde on the sidelines of the World Bank/IMF annual meeting in Washington, October 3, 2017

The International Monetary Fund yesterday approved Rwanda as latest member of its so called “Policy Coordination Instrument (PCI).

The new tool to support governments in financial trouble, was launched in July 2017 by the Fund’s Managing Director Christine Lagarde. It involves no money.

Instead of providing cheap loans to countries, this IMF tool serves as a good housekeeping seal of approval for a government’s reform program.

With that approval in hand, governments would be more likely to be able to access other forms of financing from banks and bond markets, according to the IMF’s own explainer.

Rwanda will be part of the program for 3 years, allowing the Fund to have access to all its plans and advice government on what to do or not do.

However, the Rwanda’s policies supported under this instrument will be required to meet the same standard as those required under a standard IMF loan.

The Fund said in a statement released late Friday from Washington that “successful completion of program reviews will help signal Rwanda’s commitment to continued strong macroeconomic policies and structural reforms”.

IMF staff will provide periodic reviews of Rwanda’s economy – every six months, during the duration of the program.

Meanwhile, in the approval statement, the Fund also endorsed Rwanda’s ambitious new National Strategy for Transformation (NST) which aims to speed up the journey toward the SDGs.

The NST’s focus is to increase reliance on the private sector as an engine of growth, job creation, bolster financial development, mobilize national savings and improve education.

However, the IMF says “financing (for the strategy) will be challenging”.

“Initiatives such as the African Continental Free Trade Area and the [G-20] Compact with Africa should help leverage additional private financing,” said Tao Zhang, Deputy Managing Director.


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